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Can Money Buy Happiness?

Yes. But you might be surprised by the ways you should spend it.

Harvard professor Michael Norton and co-author Elizabeth Dunn have a new book out, Happy Money: The Science of Smarter Spending, that details the research on the 5 best ways to turn your dollars into lasting smiles. What are they?

1) Buy Experiences

“…57 percent of Americans reported that the experiential purchase made them happier than the material purchase, while only 34 percent reported the opposite. This difference was more pronounced among women,young people and those living in cities and suburbs. But the same basic pattern emerged even for men, the elderly, and country dwellers. In study after study, people are in a better mood when they reflect on their experiential purchases, which they describe as “money well spent.”

2) Make It A Treat

“…knowing you can’t have access to something all the time may help you appreciate it more when you do… When you love a television show — say, The Office — you might think the best way to maximize your happiness is to buy the DVD set and watch all the episodes straight through. Getting rid of the commercials and eliminating the weeklong wait between episodes seems sensible. But research suggests that taking breaks between episodes can increase your enjoyment. Perhaps most amazingly, commercials can improve the experience of watching television. Even entertaining shows can start to drag after five to seven minutes, decreasing our enjoyment. Commercials disrupt that adaptation process, so when the show comes back on, we can fall in love with Jim and Pam all over again.

3) Buy Time

“People who feel they have plenty of free time are more likely to exercise, do volunteer work, and participate in other activities that are linked to increased happiness. Although money can be used to buy “free time,” in part by outsourcing the demands of daily life such as cooking, cleaning and even grocery shopping, wealthier individuals report elevated levels of time pressure… Wealthier individuals tend to spend more of their time on activities associated with relatively high levels of tension and stress, such as shopping, working and commuting.“

4) Pay Now, Consume Later

“Delay can enhance the pleasure of consumption not only by providing a opportunity to develop positive expectations, but also by enhancing what we call the “drool factor.” The very best stimulus for studying the drool factor? Chocolate. In a recent experiment, college students chose whether they wanted a Hershey’s Kiss or a Hershey’s Hug. They either ate their chosen chocolate immediately or waited thirty minutes. When students had to wait for their candy, they enjoyed it more and expressed more interest in buying additional Hershey’s chocolates. Even though they didn’t learn anything new about the chocolates, the delay provided an opportunity to build visceral desire, to drool a bit.“

5) Invest In Others

“By the end of the day, individuals who spent money on others were measurably happier than those who spent money on themselves — even though there were no differences between the groups at the beginning of the day. And it turns out that the amount of money people found in their envelopes — $5 or $20 — had no effect on their happiness at the end of the day. How people spent the money mattered much more than how much of it they got.”